Co-operatives and Mutuals

What is a co-op?

A co-operative is an organization owned by the members who use its services (a consumer co-operative or credit union), or by people who work there (a worker co-op), or by those who live there (a housing co-operative). When different stakeholder groups share a common interest in the success of an enterprise these groups can use different classes of membership in the co-op's bylaws to organize how they can work together (a multi-stakeholder co-op).

Co-operatives can provide virtually any product or service and are different from other businesses in that they use profits for purposes that are directed by the board and membership. Co-operatives exist in every sector of the economy and can touch every aspect of our lives.

So, you can work in a worker’s co-op, live in a housing co-op, buy your groceries, clothing and other items from retail co-ops, send your children to a child care co-op, do all your banking at a credit union, and insure your life and your assets with an insurance co-op.

Co-ops provide consumers with a distinct values-based and community-owned and controlled alternative. Unlike the private, public, or voluntary sectors, all co-operatives around the world are guided by the same seven principles:

Voluntary and open membership

Democratic member control

Member economic participation

Autonomy and independence

Education, training, and information

Co-operation among co-operatives

Concern for Community

What is a mutual?

The term “mutual” is almost always – though not exclusively – used to describe an insurance company in Canada. In a mutual insurance company, the policyholder is the insured party and also a participant in the business – like a co-operative. If you terminate a mutual insurance policy, the product, you are also withdrawing from the mutual business and giving up the rights of ownership.

The security of pooled of funds and shared risk among a large group of people is a very stable and successful business model that has existed since before Canadian confederation. Mutuals tend to grow steadily over time and this serves the interests of both current and future policy holders.

Other types of insurance companies may be owned by outside investors, not policyholders, and it is the investors who risk their capital and reap any profits. The mutual insurance company will return any excess revenue by lowering the cost of policies which keeps the market competitive, or by investing in improving services or supporting their community, as the members decide.